INTERNATIONAL SCHOOLS REPORT 2017 MIDDLE EAST. Mirka Strano (0) (0)

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1 INTERNATIONAL SCHOOLS REPORT 2017 MIDDLE EAST Mirka Strano Corporate Business Development Manager Pacific Prime International Schools Division +971 (0) (0)

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3 Contents Pacific Prime Employee Benefits & Service Profile 04 Pacific Prime Employee Benefits & Service Profile cont. 06 The Middle East: High-end Medical and International Schools 08 High-end Medical (HEM) Insurance Dubai 14 Conclusion 18 Pacific Prime is a leading global insurance broker with 6 offices around the world and more than 15 years experience in the international private medical insurance sector. As an expert in providing employee benefits advice, this report has been compiled through our vendor surveys, medical trends reports, and our extensive and unparalleled experience in the international school s market. The purpose of this report is to provide an overview of plans in the Middle East so you can weigh up if your employee benefits program is meeting the expectations of today s employment market. While we re confident in the information this report contains, we appreciate that plan designs, and facility and hospital requirements may differ depending on where you are located. As such, we welcome any requests for more specific advice and quotes related to obtaining better employee benefits programs for your employees, wherever they may be. Contact Pacific Prime today. 3

4 Pacific Prime Employee Benefits & Service Profile We are your global benefits & service specialist Pacific Prime was founded in Hong Kong in 2000 as an expert employee benefits and medical insurance broker, growing from one office to more than 300 worldwide staff (including 100 based in Dubai) in 15 years. Our clients total over 2,000 companies, which include global MNCs, SMEs, and international schools, while we also serve more than 120,000 individual clients around the world. The growth Pacific Prime has experienced in recent years has allowed us to further strengthen our service capabilities, bolstering our capacity with highly skilled staff who specialize in employee benefits (High-end and Medical, Non-medical benefits). We also provide expertise in Property & Casualty insurance. We intend to continue our reputation as a key partner for leading international insurers Bupa Global, Allianz Worldwide Care, Cigna, Aetna, AXA Gulf, and Aviva. Our performance was recently recognized when we were awarded the prestigious Top Global Distributor (Individual) title from BUPA for the third consecutive year. Using Pacific Prime to your advantage As one of only a few intermediaries that are respected enough to partner with all major insurance companies, you can be sure that you will receive a complete, transparent, and impartial review of the market as our core service. Pacific Prime works for the client, not the insurer, and our teams will work tirelessly to help you reduce your total insurance expenditure while still delivering a great solution with outstanding year-round support for your members. 4

5 Cost control When it comes to renewing your employee benefits program, a rigorous annual benchmarking process will ensure you receive the most competitive premium prices. Knowledge & experience As insurance experts, our extensive experience and industry knowledge allows us to keep you up to date with market trends, insurance changes and legal regulations. The Pacific Prime market analysis puts you in the best position to fully understand all your options and how this benefits the company and staff. We will also help to identify the less tangible aspects of each policy - this often makes the difference to the service you receive, as well as the overall experience for your members. Including the information from all available vendors is time consuming, so Pacific Prime performs this process for our clients and presents them with a transparent market review. This way, you will know if you plan still delivers the best value for money, year-on-year! Our close, long-standing insurance partnerships also give us the competitive advantage when it comes to negotiating your premiums. Your first point of contact Pacific Prime will act as your first point of contact in order to ensure that the service your staff receive remains consistent and of a high standard. This approach means that, even if you change insurers, you and your members will always be dealing with Pacific Prime. We will build a relationship of trust with your company and ensure that advice and claims processing is simple and straightforward every time. We also provide our clients with the option to select a plan that meets their specific budget and benefits requirements without needing to wonder what sort of claims support each insurer might provide. 5

6 Pacific Prime Employee Benefits & Service Profile cont. Key strengths Our service & support Extensive experience with regionalization / localization of employee benefits in the Middle East Streamlining the transition process - successful management of switching insurers or intermediaries or appointing us as your intermediary for your current plan Benefits consulting plan analysis and design to maximize benefits within your budget Cost containment stable premium increases and plan management Single solution and contact point for all insurance requirements Multi-language service capability (over 18 nationalities) Year-on-year annual benchmarking, policy and claims review to ensure value for money Employee orientation and daily support for benefit queries and other questions In house, year-round claims processing Complete plan management - member movements, accounting and invoicing Internal client management system to provide real time support for members Major claims management (i.e. emergency evacuations and inpatient service) Insurer negotiations for premium, renewal and claim issues - strong and established relationships with insurers as a top distributor both locally and globally 6

7 Products we offer (please note some products may be region specific) Medical insurance - Covering expatriates and locally hired foreigners High-end and low cost medical insurance Employee protection Term Life, Accidental Death & Dismemberment, Long Term Disability Property - Covering all risks Liability Public, employers, directors & officers Professional indemnity Group travel domestic & international * Note: some products may be region specific 7

8 The Middle East: High-end Medical and International Schools The regulatory landscape for the private healthcare sector in the Middle East The Middle East is going through a phase of significant changes concerning the way medical treatment is funded. Many countries around the world are currently designing or implementing regulations that will make health insurance mandatory. In Dubai, as of June 2016, all residents must have health insurance in place. The medical insurance plans offered within the Emirate of Dubai must be compliant with the minimum requirements of cover set by the Dubai Health Authority. medical treatment and support the growth of the private healthcare sector. The Governments of Kuwait and Qatar are in the process of establishing a mandatory health insurance system for expatriates. As of January 2015, Bahrain has introduced a scheme that requires private companies to pay a fee for each employee (both expats and Bahraini) which gives access to medical treatment at public hospitals. In Kuwait, the government has planned to restrict expatriate access to public hospitals by late new hospitals providing expats with medical care will open, however the compulsory health insurance fee required to apply for or renew a visa will increase from KD 50 to KD 130. In Oman, the population growth is impacting the demand for quality private healthcare facilities. The number of private hospitals has grown significantly from 2 in the 1970s to about 70 in At the same time, low oil prices represent a threat for the ability of the government to keep funding the cost of treatment. Through the implementation of compulsory medical insurance cover payable by businesses to private insurance companies, governments are shifting the financial burden of medical costs to the private sector. As a consequence of this, Oman may follow, in the future, the example set by its neighboring countries and consider the introduction of mandated health insurance. Compulsory medical cover through the private insurance sector will allow the government to reduce their financial exposure for covering 8

9 Pay trends in the UAE and GCC in has seen stable pay scales in the GCC as salaries have grown at a lower percentage than the 5% forecasted. 1 About 35% of employees in the UAE for example, mostly the ones employed in the oil & gas industry, have received no pay increase in The large majority of companies are moving away from fixed increments towards a purely merit-based review of salaries. The industries which have seen higher increases include healthcare, FMCG, technology and automotive. Benefit costs have risen higher than base salaries, particularly medical insurance costs and school fees. Employers are facing a challenging time to explain to employees that the cost of benefits has increased significantly, although employees don t see it. For this reason, companies are moving away from providing a pay slip to employees as nowadays, it is more common to see companies offer a pay statement which includes details of salary, allowances and also benefits. With general inflation running higher than salary increases, the GCC is facing a challenging time in attracting and retaining talent. Asia, with higher salary increases than inflation, has a higher chance of attracting staff. It is worth noting that in 2016, there were more Indian nationals leaving the UAE than there were entering the region, as the Indian economy booms and salaries increase at a rate of circa 10% per year. 1 Pay Trends in UAE and GCC, Robert Mosley, Lemon Pip Consulting, November 9th

10 Inflation, average consumer prices (% change) Country Bahrain Egypt Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Tunisia United Arab Emirates International Monetary Fund, World Economic Outlook Database, October 2016 Shaded cells indicate IMF staff estimates Recruitment trends and challenges for international schools Middle East The Middle East is a highly competitive market for international schools. As per ISC s research new schools have opened in the Middle East in the past five years for pre-school, primary, and secondary school children. 70 more schools are expected to open this year and in the near future. Some schools have been affected by low oil prices as many families employed in the oil and gas industry have not returned to the Middle East after the summer. In terms of recruitment, there are a few factors that may have an impact on the ability of the Middle East to attract and retain staff: GCC Education Industry, May , Alpen Capital Despite the combination of a teachers shortage and a rapidly rising population in the GCC, new schools have been opening their doors and the number of students projected to reach 15 million by 2020, compared to 12.6 Compensation and benefits: The UAE s average salary for teachers at premium international schools is lower than those of Switzerland, the UK, Hong Kong, and Singapore. Compounding this will be the fast-paced development of the China-owned private bilingual schools market which will create a huge demand for teaching staff in the Middle East. Despite teaching salaries here being comparable to those in China, the latter has a much lower cost of living. 10

11 Medical trends in the Middle East Net medical inflation [NMI] measures help us understand how quickly the costs of medical care are rising in a region, and when compared to other countries. It can be a useful analysis tool for both brokers and clients alike, but you should keep in mind that NMI does not include general inflation. Most countries in the Middle East have experienced medical inflation rates running higher than general inflation. The Sultanate of Oman has seen double digit increases in medical costs constantly for the past four years. The United Arab Emirates have witnessed stable medical inflation rates for the period Net Medical Inflation in the Middle Eastern Countries listed below has been on average 9.2% in 2015 and 8.7% in To help us put these figures into context, we also need to have a look at medical trends in other regions. In 2015 and 2016, medical costs in China increased by 4% and 5.5%, respectively. In Hong Kong, the medical inflation rate was 4.8% in 2015 and 4.1% in In the UK, medical costs increased at a rate of 5.9% in 2015 and 7.4% in * These figures do not include general inflation. 11

12 Net (%Annual Medical Trend Rates) Country Bahrain N/A N/A Egypt Kuwait N/A N/A Lebanon N/A N/A Qatar Saudi Arabia Sultanate of Oman Turkey UAE Source: AON Hewitt Global Medical Trend Rate (2013, 2014, 2015, 2016) The main factors affecting medical inflation in the Middle East are: Steady population growth and longer life spans in the Middle East is driving greater demand for medical treatment. An increase in non-communicable diseases and lifestyle diseases - The Middle East has witnessed a dramatic increase in people affected by respiratory and cardiovascular diseases and diabetes, both of which are caused by an increasingly sedentary lifestyle and poor dietary habits. The high cost of medical research and new medical technologies. Healthcare professionals shortage: most doctors and specialists operating in the Middle East are overseas expats. As such, wages and benefits offered to doctors must be designed to attract and retain these professionals. A fee for service model which still dominates many healthcare providers. The transition towards value based care is still in its infancy in the Middle East, although companies offering tele-medicine services are now present in the region and growing at a fast pace. Based on the American Medical Association, 70% of nonlife threatening conditions could be resolved by speaking to a doctor over the phone 4. The increasing costs of medical treatment and healthcare over-utilization have a direct impact on medical insurance premiums, and adopting a workplace wellness strategy has become more and more important as a tool for medical cost containment. Medical Insurance forms part of the employee benefits package and is the one benefit that is most affected by inflation. We have observed that employees do not fully appreciate the cost implication this high inflation has on their employer Glue, C.J. (2013) The cost reduction and healthcare service benefits of Telemedicine

13 Medical Trends - Middle Eastern Countries Egypt Qatar Saudi Arabia Sultanate of Oman Turkey UAE Medical plan design trends for international schools We have observed three main insurance purchasing trends in the region: The existence of two types of plans: a local option through a local provider and an international plan offering a wider scope of cover. This type of insurance arrangement is often found in countries where health cover is mandatory. The local plan is normally set up for the purpose of meeting regulatory requirements and the international plan to provide comprehensive cover to overseas hires with an insurance brand name that they recognize and are familiar with. Existence of a High-End Medical plan only through international insurers such as Allianz Worldwide Care, BUPA International, CIGNA, GBG Tiecare and AETNA. These insurers offer the option to tailor the cover, and that includes coverage that is complaint with local regulations. Existence of a plan providing regional cover only from a regional insurance company. These schemes offer very competitive premiums and the insurer is locally present. However, the area of cover is normally limited to countries within the GCC or South East Asia - leaving an insurance gap for employees who come from Europe, Australia or the United States who are not covered under a state health insurance scheme. 13

14 High-end Medical (HEM) Insurance Dubai DHA mandated cover The factor with the highest impact in Dubai has been the introduction of mandatory health insurance by the Dubai Health Authority (DHA). Introduced in three stages between 2014 and 2016, the DHA s mandatory health insurance scheme set out to ensure that all residents, including expats and their dependents, have adequate health insurance coverage - the vast majority of which are provided by employers. In fact, employment visas will not be issued or renewed in Dubai without employer sponsored insurance. This has resulted in the number of insured people within the Emirate to reach close to 100% by the end of June 2016 (final deadline set by DHA. By this date all residents in Dubai must have cover in place). All insurers in Dubai have to provide cover for pre-existing conditions and maternity. This has resulted in an increase in the cost of insurance as providers need to have more premiums in their pools in order to cover the increased claims. 14

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17 Facilities & treatment costs The population in Dubai has increased at about 5% per year in the past few years. In Dubai there are 25 private hospitals and 4 government hospitals. Additionally, the DHA has granted the license for the opening of 10 more private hospitals in Dubai in the last quarter of At least one of these new hospitals will be a five-star luxury hospital. Statistics from the Dubai Health Authority Annual Statistical Report show that the number of inpatient and outpatient treatment carried out at private hospitals has increased significantly over the past 5 years, whereas the number of inpatient and outpatient treatments at government hospitals has remained stable. A total number of 6,475,562 outpatient visits was recorded in private hospitals in 2015 (12% more than 2014). A total of 167,097 inpatients encounters were recorded in private hospitals (12.7% more than 2014). Lifestyle diseases, such as diabetes and cardiovascular diseases are increasingly affecting a larger number of people in the city. According to the International Diabetes Federation, there were over 1 million cases of diabetes in the UAE in and a 14.6% prevalence of diabetes in adults, which is significantly higher than the global prevalence percentage of 8.3%. In the last quarter of 2015 the Dubai Health Authority had introduced regulations on increasing prices for healthcare services, and mandated a maximum percentage increase at the general inflation rate of 4.41% for The increase can be applied pending approval of the Dubai Health Authority

18 Conclusion A higher demand for treatment in private hospitals and a relatively stable offer of private healthcare facilities may cause an increase in the price of treatment, with a consequential impact on losses for medical insurers and premiums. Losses for insurers may also be impacted by the fact that all providers must offer cover for pre-existing conditions and maternity, and by the increase in the number of residents affected by lifestyle diseases. However, the introduction of pricing regulations for private hospitals and a greater offer of tele-medicine services may have a positive impact on medical inflation in the upcoming few years. Ultimately this means that it is imperative to conduct a thorough assessment of the market every year. Through working with all vendors, Pacific Prime is able to provide a transparent and complete benchmark, putting you in the best position when it comes time to select a vendor for your next insurance period. 18

19 Medical insurance offered in Dubai There are 45 insurers who have obtained the Health Insurance Permit by the Dubai Health Authority and who offer compliant medical insurance in Dubai. Of these 45, 8 are fronting partners for the major international medical insurers who provide compliant high-end medical insurance for the Emirate of Dubai. Below is a list of the insurance vendors who are almost exclusively dedicated to health insurance. Most of the other vendors in the region offer a wider range of insurance products including general insurance. Vendor Aetna Allianz - Worldwide Care BUPA Global CIGNA AVIVA William Russell Now Health Morgan Price IntegraGlobal GBG - Tiecare Al Ain Ahlia Fronting Partner in Dubai Orient Insurance PJSC Oman Insurance Company Saudi Arabian Cooperative Insurance Company Emirates Insurance Company PSC Dubai Insurance Company Royal and Sun Alliance Watania Islamic Arab Insurance Company - Salama Aman 19

20 High-end/ international We have included the 9 active insurers in the high-end/international medical sector and 3 insurers active in the regional medical sector in the service summary below. Service Description Direct Billing Facilities in Dubai e-claim Medical Escort Pharmacy Delivery (Chronic Drugs) AETNA -Al Ain Ahlia Allianz - Orient BUPA Global -Oman Insurance CIGNA - Saico AVIVA - Emirates Ins. William Russell -Dubai Insurance NOW Health Morgan Price- Watania V V V V V V V V V V V V V V V X X V V V X X X X X X X V X X X V X X X X AXA Gulf Appointment Service 24/7 Emergency Line Mobile Application Online Portal Employee assistance program V X X X V X X X X V V V V V V V V V V V V V V V V X X V V V V V V V X X V V V V X V X X X V 20

21 Definitions 1. Outpatient direct billing: cashless treatment for outpatient services within a specified network 2. e-claim: platform to provide electronic claims submission through mobile, online or functionality 3. Medical escort: a representative from the insurance company who provides assistance with inpatient pre-admissions, translations and other hospital procedures 4. Pharmacy delivery: door to door delivery for prescribed chronic medications 5. Appointment service: general and specialist appointment bookings 6. 24/7 emergency hotline: dedicated 24/7 hotline to assist with hospitals guarantee of payments 7. Mobile application: mobile service to provide on-the-go support for various services such as facility finders, coverage and benefits, claims submission and policy information 8. Online portal: a secure website to provide instant access to all policy information, including direct billing 9. Employee assistance program: counseling for employees during stressful times Plan design & premium overview The facilities (hospitals and clinics) a member can access is the primary driver for the cost of the plan. Benefits and coverage are predominately governed by this access and we can identify 4 levels of cover. In addition to this, optional benefits, such as maternity, dental and preventive wellness can also impact the premium due to the high utilization of these particular benefits. 21

22 Level Coverage Cost (AED) High-End Medical Geographical Area: International Coverage: Comprehensive with access to all private, high cost hospitals. 7,000 + Mid-High End Medical Geographical Area: GCC Coverage: Access to most private hospitals, excluding the most expensive ones. 3,500 + Low-Mid End Medical Geographical Area: UAE only Coverage: Limited hospital networks. Cover is limited or only slightly more comprehensive than the mandated benefits Low Medical Geographical Area: One Emirate only Coverage: EBP plan (mandated cover only) Additional employee benefits and property & casualty coverage in the Middle East Supplementary Medical Insurance Life & ADD Critical Illness Income Replacement & Life Insurance Short & Long Term Disability Various Life Insurance Options Commercial Insurance All Property Risks Public/ Third Party Liability Employers Liability Directors & Officers Liability Educators Liability Business Interruption Personal Accident (Teacher & Student) Accidental Death Accidental Dismemberment Annual Travel Worldwide Travel Inconveniences Group Home Insurance Building Contents Personal Valuables 22

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24 Simplifying Health Insurance REF: UAE25